Creative’s ZiiLabs Sale – Boon or Bane?

Creative’s ZiiLabs Sale – Boon or Bane?

The news that our once-popular local company, Creative, is selling off ZiiLabs to Intel, has probably shocked a few people following both companies closely, and as well as local tech enthusiasts as well.

Effectively, Creative appear to be licensing its ZiiLabs chips to Intel, and at the same time Intel gains access to ZiiLabs’ “engineering resources and assets”. It sounds as if Creative has given Intel access to design and develop the ZMS chips for use in ARM-based devices, and perhaps as an alternative to PowerVR’s chips. The ZMS chips are specially designed for multimedia processing, so its little wonder that Intel is making a move on ZiiLabs. While the licenses and patents will remain with Creative, manufacturing of the chips is hinted to be outsourced, as is the norm with the three-way relationship between Apple, Samsung and Foxconn.

While the move seems to be beneficial to Creative’s bottomline in the short term, in the long run, Creative might not be reaping the harvest that they’ve created with the ZiiLabs ZMS chips. The financial gains for this deal is entirely dependent on Intel’s sale of their mobile computing platforms, given that Creative’s own sales with the ZMS chips are said to be quite slow. Between a rock and a hard place, it seems that signing a deal with the devil might be the only way out of the red.

Creative has always been known as an engineering powerhouse back in the heydays of the 90s, and its no surprise that their product design, and marketing/sales department are quite lacking. Going against giants and market trends were also bad moves, in my opinion – wasting resources on a fruitless (no pun intended) “MP3 war” against Apple, and trying to break into the Chinese market with their ZiiO/HanZpads, especially with a premium price point.

My advice to Mr Sim Wong Hoo? Maintain your focus on engineering and development,  improve your product designs, streamline your product lines, and get better people at sales/marketing, and just maybe you can get into the black.

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